Reference no: EM131609809

Question - Teller Ltd has been contracted by Morrow Ltd to construct a motorcycle manufacturing plant. The work will involve complicated engineering works, and is expected to take three years. Teller and Morrow have negotiated for this to be a fixed price contract with a total price of $75 million. The contract was signed on the 1st of July 2015, and construction commenced three months later. Teller?s financial year ends on the 30th of June. Teller bills the customer $25 million each year and the customer pays before year end. The following information is available in relation to the construction: 2016: Costs spent during the year $14,000,000. Estimated costs to complete $50,000,000. 2017: Costs spent during the year $38,000,000. Estimated costs to complete $15,000,000. 2018: Costs spent during the year $15,000,000. Estimated costs to complete $0. How much of the profit is recognised in 2016? Round your answer to the nearest dollar.